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CIRCULAR

PROVIDING FOR AIR CARRIAGE AND GENERAL AVIATION

THE MINISTRY OF TRANSPORT

Pursuant to the 2006 Law on Civil Aviation of Vietnam;

Pursuant to the 2005 Investment Law;

Pursuant to the Government's Decree No. 51/2008/ND-CP of April 28, 2008, defining the functions, tasks, powers and organizational structure of the Ministry of Transport;

Pursuant to the Government's Decree No. 76/2007/ND-CP of May 9, 2007, on air carriage business and general aviation,

The Minister of Transport provides for air carriage business and general aviation as follows:

Chapter I

GENERAL PROVISIONS

Article 1. Scope of regulation This Circular guides the following:

1. Procedures for:

a/ Approval of aircraft lease or lease-out between Vietname se organizations and individuals and foreign organizations and individuals:

b/ Registration of transportation terms of Vietnamese airlines;

c/ Grant of licenses for setting up Vietnam-based representative offices or booking offices of foreign airlines;

d/ Grant of certificates of registration for issuance of house airway bills;

e/ Grant of the air carriage right; approval of cooperation contracts directly related to the air carriage right.

2. Requirements on aircraft lease or lease-out; obligations of airlines in case of delayed or cancelled flights, interrupted or unaccepted carriage; representation and ticket sale activities of foreign airlines, and issuance of house airway bills.

3. Dossiers of application of air carriage business licenses or general aviation business licenses.

Article 2. Subjects of application

This Circular applies to Vietnamese and foreign organizations and individuals involved in the aircraft lease or lease-out, air carriage and general aviation activities in Vietnam.

Chapter II

PROCEDURES FOR APPROVAL OF, AND REQUIREMENTS ON, AIRCRAFT LEASE OR LEASE-OUT

Article 3. Procedures for approval of aircraft lease or lease-out

1. An organization or individual applying for approval of an aircraft lease or lease-out shall send 8 (eight) dossier sets to the Civil Aviation Administration of Vietnam. Such a dossier set comprises:

a/ An application for approval of the aircraft lease or lease-out;

b/ A report explaining the contents specified in Article 39 of the 2006 Law on Civil Aviation of Vietnam;

c/ Aircraft lease or lease-out contract;

d/ Documents attesting to the legal entity status and business operation of the lessee (in case of lease-out) or the lessor (in case of lease), aircraft operator and maintainer;

e/ Documents on technical parameters of the aircraft;

f/ Documents attesting to the right (to possess, own or use) of the aircraft lessor. For an aircraft leased out with or without crew, there must also be aircraft operator and maintainer certificates and insurance policy.

2. The Civil Aviation Administration of Vietnam shall examine the dossier, and consider and approve the aircraft lease or lease-out within 10 days after receiving the complete and valid dossier.

Article 4. Requirements on aircraft lease or lease-out

1. Organizations and individuals that lease aircraft shall actually operate, control and take responsibility for air carriage rights granted to them.

2. Organizations and individuals that lease aircraft may not let any other parties directly or indirectly benefit from the use of air carriage rights other than agreed rent rates payable during the operation duration or flight charter as well as other directly related costs.

3. Organizations and individuals that lease or lease out aircraft are obliged to attend and explain aircraft leases or leases-out at appraisal meetings and bear all expenses for the appraisal.

4. Before operating aircraft for flights, organizations and individuals shall notify such to and provide the Civil Aviation Administration of Vietnam with documents on temporary import for re-export of aircraft (in case of lease) or temporary export for re-import of aircraft (in case of lease-out) issued by customs offices.

5. In case of an aircraft leased for no more than 7 (seven) consecutive days as specified in Clause 3. Article 39 of the 2006 Law on Civil Aviation of Vietnam, organizations and individuals shall notify in writing the Civil Aviation Administration of Vietnam of the lessor's possession of an appropriate aircraft operator certificate.

6. Organizations and individuals that lease or lease out aircraft are obliged to notify the Civil Aviation Administration of Vietnam of violations committed by involved parties in performing aircraft lease or lease-out contracts; the premature termination or extension of the validity term of the aircraft lease or lease-out, and the actual period of time for bringing aircraft out of Vietnam (in case of aircraft lease) or bringing aircraft into Vietnam (in case of aircraft lease-out).

Chapter III

AIR TRANSPORTATION TERMS

Article 5. Issuance of transportation terms

1. Airlines shall elaborate and issue their air transportation terms in compliance with law.

2. Air transportation terms must provide for rights and obligations of carriers; rights and obligations of customers; tickets; freight rates and conditions for application of these rates; booking; flight schedules; delayed or cancelled flights, denied or limited carriage; reimbursement of money; civil liability for damage caused to customers; transportation of special passengers.

Article 6. Registration of transportation terms

1. Airlines that wish to register their transportation terms shall send dossiers to the Civil Aviation Administration of Vietnam. Such a registration dossier comprises:

a/ An application for registration of transportation terms;

b/ A copy of transportation terms.

2. The Civil Aviation Administration of Vietnam shall examine the dossier and grant a certificate of registration of transportation terms to the airline within 7 days after receiving the valid dossier.

Article 7. Obligations of airlines in case of delayed or cancelled flights, interrupted or unaccepted transportation

1. In case a flight is delayed or transportation is interrupted for 15 minutes or more behind schedule, the airline shall notify once every 15 minutes through the public address system the following flight information to passengers:

a/ Number of the flight and the flight departure and destination;

b/ Reason for the flight delay or transportation interruption:

c/ Expected takeoff time or an alternative flight plan;

d/ Passenger attendance plan;

e/ Passenger assistance section (location and signs):

f/ Apology to passengers.

2. In case the passenger boarding on a flight has been confirmed but the transportation is interrupted or the flight is delayed due to the airline's fault, the airline is obliged to attend to its passengers as follows:

a/ Passengers boarding on a flight delayed for 2 (two) hours or more will be provided with light beverages;

b/ Passengers boarding on a flight delayed for 3 (three) hours or more will be provided with meals and drinks depending on the time of catering: from 6:00 to 8:00 hours, breakfast; from 12:00 to 14:00 hours, lunch: and from 19:00 to 21:00 hours, dinner.

c/ Passenger boarding on a flight scheduled within a day and delayed for 6 (six) hours or more will be provided with accommodations suitable to the airport's actual conditions.

d/ Passenger boarding on a flight likely to be delayed for 6 (six) hours or more from 22:00 hours of a day to 7:00 hours of the next day will be transported by the airline to a hotel, with priority given to special passengers.

e/ Itineraries will be changed so that passengers can get to their places of destination in the quickest and most convenient manner;

3. Passengers with tickets whose flight boarding has been confirmed and who cannot be transported or the flight is cancelled due to the airline's fault, the airline shall:

a/ Notify passengers of the reason for flight cancellation:

b/ Perform the obligations specified in Clause 2 of this Article;

c/ Advance a non-refundable compensation to passengers under the law on advanced non­refundable compensation:

d/ Perform obligations in lieu of those specified at Points b and c of this Clause as agreed upon with passengers.

4. In case the transportation is interrupted, delayed or unaccepted not at the fault of passengers whose flight boarding has been confirmed, or the flight is cancelled, the airline shall reimburse the whole ticket money or unused ticket money amounts to passengers right at the airport if these passengers so request or at branch offices and booking offices designated by the airline, based on itineraries or receipts issued by the airline or issued in the airline's name. The reimbursement of ticket money to passengers is provided as follows:

a/ It is not subject to the agreed limitations on ticket money reimbursement and reimbursement expenses (if any);

b/ For totally unused tickets, the ticket money amount to be reimbursed is equal to that paid by the passenger. Such ticket money includes air fare, taxes and charges prescribed by the Government and airport authorities, passenger service charges at the airports collected by the airline for the airports and related charges.

c/ For partially used tickets, the ticket money to be reimbursed must not be lower than the difference between the paid ticket money and the ticket money amount charged for the passenger's traveled distance and other used services.

Article 8. Carriage of special passengers

1. Airlines shall perform the obligations towards special passengers like ordinary passengers, and arrange attendance and assistance stewards; and at the same time provide assistance services in the course of carriage of the following special passengers:

a/ Persons with disabilities;

b/ Pregnant women;

c/ Aged persons;

d/ Children.

2. Supportive tools being personal belongings of these passengers are exempt from air freight and fare.

3. Assistance services required for each type of special passengers and the time limit for these passengers to inform their special needs in advance for these services must be specified in the transportation terms and posted up at booking offices of airlines and airports.

Chapter IV

REPRESENTATION AND TICKET SALE ACTIVITIES OF FOREIGN AIRLINES

Article 9. Grant and validity extension of licenses and certificates related to representation and ticket sale activities of foreign airlines in Vietnam

1. A foreign airline shall send a dossier of application for a license for setting up a representative office or a booking office' to the Civil Aviation Administration of Vietnam, which comprises:

a/ An application for a license, made according to set form;

b/ Notarized translations of documents attesting to the legal entity status of the airline, written certification that the legal control right belongs to the country where the airline is headquartered (establishment license or business registration certificate or an equivalent paper);

c/ The airline's incorporated articles in Vietnamese;

d/ Papers attesting to the right to use the premises of the representative office or the booking office;

c/ Letter of appointment of the head of the representative office or booking office:

f/ Fee receipt.

2. A Vietnamese organization or individual shall send a dossier of application for a certificate of registration of representation operation of a Vietnamese legal entity for a foreign airline in Vietnam, made according to a set form, to the Civil Aviation Administration of Vietnam, which comprises:

a/ An application for a certificate of registration of representation operation of a Vietnamese legal entity for a foreign airline in Vietnam:

b/ Business registration certificate, establishment license or an equivalent paper of the organization or individual undertaking to act as a representative:

c/ An agreement on authorized representation in Vietnam between the foreign airline and the Vietnamese organization or individual:

d/ Fee receipt.

3. A Vietnamese enterprise shall send a dossier of application for a certificate of registration of a contract designating a general booking agent or a booking agent for a foreign airline, made according to a set form, to the Civil Aviation Administration of Vietnam, which comprises:

a/ An application for a certificate of registration of a contract designating a general booking agent or a booking agent for a foreign airline;

b/ Business registration certificate or an equivalent paper of the applicant;

c/ Notarized translation of the business registration certificate or an equivalent paper of the foreign airline issued by a competent authority of the country where this airline has been established;

d/ Contract designating a general booking agent or a booking agent:

e/ Fee receipt.

4. Validity of licenses and certificates:

a/ A license for setting up a representative office is valid for 5 (five) years from the date of issuance;

b/ A license for setting up a booking office is valid for 2 (two) years from the date of issuance;

c/ A certificate of registration of representation operation of a Vietnamese legal entity for a foreign airline in Vietnam is valid for 5 (five) years from the date of issuance;

d/ A certificate of registration of a contract designating a general booking agent or a booking agent for a foreign airline is valid for 2 (two) years from the date of issuance.

5. The validity of establishment licenses and registration certificates specified in Clauses 1, 2 and 3 of this Article may be extended. Organizations and individuals applying for extension shall send dossiers of application to the Civil Aviation Administration of Vietnam, enclosed with copies of licenses, certificates, reports on operation under relevant licenses or certificates, fee receipts and other additional documents (if required).

6. The Civil Aviation Administration of Vietnam shall examine dossiers and decide on the issuance or validity extension of establishment licenses or registration certificates specified in Clauses 1, 2 and 3 of this Article within 7 days after receiving valid dossiers.

Article 10. Notification of and reporting on operation of representative offices, booking offices and representation activities of Vietnamese legal entities for foreign airlines

1. Representative offices and booking offices of foreign airlines. Vietnamese legal entities acting as representatives of foreign airlines in Vietnam shall make notices and reports on their operation according to a set form.

2. Within 45 days after being granted a license or a registration certificate, a representative office, booking office or Vietnamese legal entity shall commence its operation at its registered office and publish on a licensed newspaper in Vietnam in 3 consecutive issues the following details:

a/ Name and address of the representative office, booking office or transaction office of the Vietnamese legal entity;

b/ Name and address of the foreign airline's headquarters;

c/ The chief representative, the head of the booking office or the representative at law of the Vietnamese legal entity;

d/ List of foreigners working at the office (names, nationalities, valid passport numbers and work permits (if any));

c/ Number, date of issuance and validity of the license or the registration certificate;

f/ Operations of the representative office or the booking office; operations of representation for the foreign airline.

3. Representative offices, booking offices and Vietnamese legal entities shall make annual reports on their operations under relevant licenses or registration certificates. Such a report shall be made according to a set form and sent to the Civil Aviation Administration of Vietnam before January 31 of the next year.

4. Representative offices, booking offices and Vietnamese legal entities shall make extraordinary reports at the request of the Civil Aviation Administration of Vietnam or in the following cases:

a/ In case of a change in the foreign staff: within 10 days after the change occurs;

b/ In case of a change in authorized operations of representation: within 10 days after the change occurs.

Article 11. Termination of operation of representative offices, booking offices and Vietnamese legal entities acting as representatives for foreign airlines

1. A representative office, booking office or Vietnamese legal entity acting as a representative for a foreign airline shall terminate operation in any of the following cases:

a/ At the request of the foreign airline:

b/ The foreign airline terminates its operation under the law of the country where it has been established or registered business operation;

c/ The license for setting up the representative office or the booking office or the certificate of representation operation registration expires or is revoked under law;

d/ The contract on authorized representation ceases to be valid.

2. Within 30 days before the projected date of operation termination, the representative office, booking office or Vietnamese legal entity shall send a notice of operation termination, made according to a set form, to the Civil Aviation Administration of Vietnam, its creditors and employees and other persons with related rights, obligations and interests. Such a notice must clearly indicate the projected date of operation termination and be publicly posted up at the office of the representative office, booking office or Vietnamese legal entity and published on a licensed newspaper in Vietnam in 3 consecutive issues.

3. Foreign airlines, representative offices, booking offices and Vietnamese legal entities acting as representatives for foreign airlines shall pay debts and fulfil other obligations towards relevant organizations and individuals under law.

Chapter V

ISSUANCE OF HOUSE AIRWAY BILLS

Article 12. Registration for issuance of house airway bills

1. Vietnamese enterprises shall send dossiers of application for registration for issuance of house airway bills to the Civil Aviation Administration of Vietnam, each comprising:

a/ An application for a certificate of registration for issuance of house airway bills, made according to a set form;

b/ A notarized copy of the Vietnamese enterprise's business registration certificate;

c/ Certificates of forwarding training of at least 2 staff members issued by the International Air Transport Association (IATA) and the International Federation of Freight Forwarders Associations (IFFFA);

d/ Fee receipt.

2. In case of registration for issuance of house airway bills by foreign forwarding service providers in Vietnam, a dossier of registration comprises:

a/ Documents specified in Clause 1 of this Article:

b/ A copy of the contract on designating an agent for issuance of house airway bills;

c/ The form of house airway bills of the foreign forwarding service provider, made according to a set form;

d/ A notarized translation of the business registration certificate or an equivalent paper of the foreign forwarding service provider.

2. A certificate of registration for issuance of house airway bills is valid for 5 (five) years after it is granted and may be extended. Forwarding enterprises shall send applications for certificate extension to the Civil Aviation Administration of Vietnam enclosed with copies of granted certificates and reports on their operations under these certificates, fee receipts and other additional documents (if required).

3. The Civil Aviation Administration of Vietnam shall examine dossiers, and consider and decide on grant or extension of certificates of registration for issuance of house airway bills within 7 days after receiving valid dossiers.

Article 13. Requirements on the provision of air freight forwarding services

1. The provision of air freight forwarding services does not constitute an air carriage activity of an airline under the 2(K)6 Law on Civil Aviation of Vietnam.

2. Air freight forwarding service providers may only carry out forwarding procedures at airports and airfields only after obtaining certificates of registration for issuance of house airway bills.

Chapter VI

GRANT OF THE AIR CARRIAGE RIGHT

Article 14. Procedures for grant of the air carriage right

1. Airlines shall submit dossiers of application for the air carriage right to the Civil Aviation Administration of Vietnam, made under Article 113 of the 2006 Law on Civil Aviation of Vietnam.

2. The Civil Aviation Administration of Vietnam shall examine dossiers and decide to grant registrations for issuance of house airway bills within 10 days after receiving valid dossiers.

Article 15. Conditions on grant of the air carriage right

1. Market demands:

a/ For an air route not yet exploited by any airline, the air carriage right shall be granted at the request of an airline intended to exploit this air route;

b/ For currently exploited air routes, the air carriage right shall be granted based on results of operation of these air routes at the time of airlines" application for the right.

2. Capabilities of the airline:

a/ Financial capacity, fleet and manpower;

b/ Feasibility of the operation plan at the time of the airline's application for the right.

3. Balance of the air route network and economic development objectives:

a/ Conditions of airport or airfield facilitation;

b/ Stable and rational development of air routes;

c/ Balance of air carriage between regions and areas, taking into consideration factors of demand stimulation and operation promotion of airports in areas with exceptionally difficult socio­economic conditions, mountainous, deep-lying and remote areas with essential needs for air carriage (essential air routes), airports with a low operation capacity and the actual operation of essential air routes by airlines.

d/ Reasonable allocation of freight for service provision to Vietnamese airlines on the North-South air routes, including Hanoi - Ho Chi Minh City, Hanoi - Da Nang and Ho Chi Minh City -Da Nang.

Article 16. Types of cooperation contracts directly related to the air carriage right

1. Cooperation contracts directly related to the air carriage right include the following types:

a/ Partnership contracts:

b/ Franchising contracts;

c/ Other contracts on operation and use of the air carriage right.

2. A partnership contract means a contract stating that an airline uses its flight numbers on flights made by another airline in Vietnam.

3. A franchising contract means a contract stating that an airline uses any of the following elements of another airline in marketing, sale and operation of its flights in Vietnam: the name and code (3 characters issued by the International Civil Aviation Organization (ICAO) or 2 characters issued by IATA), symbol or other trademark images.

4. Requirements on signing and performance of a cooperation contract directly related to the air carriage right include:

a/ The contract must have a clause stating that it will come in force only after it is approved by the Civil Aviation Administration of Vietnam:

b/ The airlines entering into the contract have the air carriage right on corresponding air routes; and the approval of the contract must ensure common interests of Vietnam and Vietnamese airlines;

c/ For a partnership between foreign airlines on air routes to/from Vietnam, these foreign airlines shall submit a partnership flight schedule to the Civil Aviation Administration of Vietnam for consideration and approval under relevant treaties.

d/ Revenues of the franchising airline do no depend on results of operation of air routes by the franchised airline.

Article 17. Procedures for approval of cooperation contracts directly related to the air carriage right

1. An airline shall send a dossier of application for approval of a cooperation contract directly related to the air carriage right to the Civil Aviation Administration of Vietnam, which comprises:

a/ An application for contract approval;

b/ A contract copy;

c/ Documents on grant of the ai r carriage right issued by the Civil Aviation Administration of Vietnam and counterpart foreign aviation authority;

d/ Documents evidencing the lawful ownership of the code, symbol or other trademark images of the franchising airline.

2. The Civil Aviation Administration of Vietnam shall examine dossiers and decide on approval of cooperation contracts directly related to the air carriage right within 10 days after receiving valid dossiers.

Article 18. Requirements on the operation of the air carriage right

1. Airlines may only conduct air carriage business within the scope of the air carriage right granted to them.

2. Airlines may neither trade in the air carriage right nor commit prohibited acts of anti-competition or unfair competition.

3. Unless they are performing contracts directly related to the air carriage right on corresponding air routes already approved under law, airlines may not conduct trade promotion, advertising or marketing involving the use of images, trademarks and symbols of other airlines for flights they operate.

Chapter VII

DOSSIERS OF APPLICATION FOR GRANT OF AIR CARRIAGE BUSINESS LICENSES AND GENERAL AVIATION BUSINESS LICENSES

Article 19. Written certification of legal capital

1. In case of establishment of a new airline, a written certification of its legal capital shall be made by a competent agency or organization as follows:

a/ For capital contributed in cash: A written certification by a bank or credit institution of the blockade of the applicant's account opened at that bank or credit institution. The blockaded money amount must be at least equal to the legal capital prescribed for the business line for which a business license is applied for or to the legal capital minus the capital contribution portion in assets and real estate calculated in monetary terms (in case capital is contributed in cash, assets and real estate). Such certification must be valid until the appicant is licensed;

b/ For capital contributed in assets and real estate (only real estate in direct service of the business purpose of the business line for which a business license is applied for): A written certification by a valuation organization or unit lawfully established and operating in Vietnam or a recognized or accredited one of the applicant's ownership or possession of assets and real estate and their value. The value of these assets or real estate must be at least equal to the legal capital prescribed for the business line for which a business license is applied for or to the legal capital minus the capital contribution portion in cash (in case capital is contributed in cash, assets and real estate). The asset and real estate ownership and possession must be maintained at least until the applicant is licensed.

2. For operating enterprises, in addition to the forms specified in Clause 1 of this Article, their audited financial statements at the time of application for a license may be used.

3. Organizations and individuals that directly certify legal capital shall take joint responsibility for the accuracy and truthfulness of certified capital amounts at the time of certification.

Article 20. Requirements on professional qualifications of personnel

1. Supervisors of aircraft operation, operation and maintenance and flight training must be experienced in relevant domains and possess relevant diplomas and certificates issued or recognized by competent agencies.

2. Supervisors of product development, marketing and sale of air carriage services must possess university degrees in economics, commerce or finance.

3. Supervisors of the financial payment system must possess university degrees in finance or chief accountant certificates.

Article 21. Foreign capital portions in investment projects on air carriage business

1. Foreign capital portions include:

a/ Direct capital contributions of foreign organizations and individuals;

b/ Capital contribution portions of foreign-invested enterprises multiplied by the holding rate of foreign organizations and individuals in these enterprises.

2. Total capital contribution portion of foreign investors in a foreign-invested airline complies with regulations on air carriage business and general aviation.

Chapter VIII

ORGANIZATION OF IMPLEMENTATION

Article 22. Responsibilities of the Civil Aviation Administration of Vietnam

1. To revoke, withdraw or suspend licenses, certificates, approval or grant of right in the following cases:

a/ Organizations or individuals that have been granted licenses, certificates or right or approved violate this Circular or Vietnamese law or treaties to which the Socialist Republic of Vietnam is a contracting party;

b/ Organizations or individuals that have been granted licenses, certificates or right or approved no longer fully satisfy the specified conditions on grant or approval;

c/ Involved parties terminate their contracts or agreements;

d/ These organizations or individuals have intentionally made untruthful dossiers or reports for examination;

e/ Required documents and papers specified in this Circular expire under regulations.

2. To inspect and carry out procedures for recognizing or accrediting the validity of documents on aircraft operation or maintenance under law.

3. To notify the termination of operation of representative offices or booking offices or representation operation of Vietnamese legal entities to provincial-level People's Committees, tax offices or police offices of localities where these representative offices, booking offices or Vietnamese legal entities are located.

4. To send certificates of registration for issuance of house airway bills by forwarding services providers to provincial-level Planning and Investment Departments of localities where these providers are headquartered, concerned airport authorities and aviation corporations.

5. To publicize periodically essential air routes following the Government's notification of difficult areas according to the criteria of per-capita income and difficult accessibility for other means of transport, and impacts of these air routes on economic development of deep-lying and remote areas and security and defense maintenance.

6. To designate Vietnamese airlines to exploit essential air routes with an appropriate frequency under law.

7. To inspect and supervise the performance of obligations by Vietnamese and foreign organizations and individuals after being granted documents and papers specified in this Circular or having these documents and papers extended.

8. To sum up and report on problems and difficulties arising in the course of implementation to the Ministry of Transport for study and timely settlement.

Article 23. Effect and implementation responsibility

1. This Circular takes effect 45 days from the date of its signing.

2. The chief of the Office, the Chief Inspector and directors of departments of the Ministry of Transport, and heads of concerned agencies and organizations and concerned individuals shall implement this Circular.